Robert Reich on 3 economic myths

Robert Reich is an influential commentator, professor and author, who served under US Presidents Ford, Carter and Clinton, in the latter case as Labor Secretary. YouTube features plenty of his short, useful videos on economics and politics. Here is one of them. Thanks to Lars P. Syll for drawing my attention to it on his blog.

As an aside, I like Reich’s use of illustrative cartoons!


Trump’s robber baron presidency – via Lars P. Syll


In Trump’s world, ​the rich in the US obviously are not rich enough. So he has set out to lower the corporate tax rate to 20 percent and abolish the estate tax. The working and middle classes are, of course, überjoyed …

via Trump’s robber baron presidency — LARS P. SYLL

Trump’s budget balls-up – via Michael Roberts

President Trump’s economic team have release their plans for the federal budget over the next ten years. It is a combination of wildly optimistic economic growth forecasts, vicious cutbacks in public services and environmental measures; and significant cuts in corporate taxes and personal taxes for the rich. But what is exercising mainstream economists are the […]

via Trump’s budget balls-up — Michael Roberts Blog


Michael Hudson on Big Government

Michael Hudson’s latest book J is for Junk Economics is a treasure trove of, by current mainstream standards, radical economic ideas. Here he is on Big Government, that much-maligned feature of modern capitalist economies (p.41-2):

“Europe’s 1848 revolutions by the bourgeoisie against Europe’s royalty, landed aristocracies and their allied vested interests sought to transfer power away from government bodies controlled by these classes (eg., Britain’s House of Lords). Subsequent democratic reform movements favored progressive taxation, consumer protection and general economic regulation. These original liberals fought to tax special interests, not to free them from taxation. The thrust of parliamentary reform since the 19th century accordingly has been to make governments strong enough to tax rent extractors such as landlords, high finance and monopolists.

These rentiers have fought back by wrapping themselves in the rhetoric of individualism. Accusing politicians of corruption and insider dealing, populist demagogues assert that government is by nature incompetent as compared to private management – which turns out to be giant Wall Street corporations and trusts. The effect (indeed, the lobbying aim) of downsizing democratic government is to turn the economy over to the financial sector and its allied rentiers to administer in their own interest. The wealthy are all in favor of Big Government when it is oligarchic.

Trickle-down economists accuse social spending programs of leading to budget deficits that are inherently inflationary, but applaud tax cuts and bank bailouts that benefit primarily the FIRE (finance, insurance and real estate) sector. Their lobbyists craft a demagogic rhetoric to attack progressive taxation, regulation and social spending programs by insisting that public management is inherently inefficient as compared to private ownership of basic infrastructure, banking and health care. Claiming that public services are not a proper function of government, they advocate privatization of state-run enterprises, roads and the post office.

Frederick Hayek’s Road to Serfdom (1944) argued that public planning to subsidize basic needs or regulate “the market” (rent extractors, banksters and fraudsters) to protect consumers and employees leads to socialist or fascist autocracy. His libertarian followers insist that government regulation violates their personal rights to charge whatever the market will bear. Their oligarchic alternative to big government is to roll back democratic reforms by attacking social spending programs, replacing progressive taxes with a low flat tax and sales taxes that fall on labor/consumers; abolishing minimum wage protection, Social Security and other public services; and privatizing public infrastructure to turn it into feudal-style rent-extraction opportunities. The aim is to un-tax the FIRE sector (mainly the One Percent) and eliminate the consumer protection and labor reforms put in place in the early 20th century Progressive Era. The meaning of the word “reform” has been inverted, using libertarian-style language coined in the late 19th century against Big Government under the control of aristocrats and other rentiers.

The real question is thus whether governments will be democratic or oligarchic. Will they subsidize the economy and undertake public infrastructure investment, or will they tax the population at large to subsidize the FIRE sector and other special interests?”


Tax and the false dichotomy between private and public

I was reminded in a useful piece by Will Hutton in Sunday’s Observer newspaper of the way private income in a capitalist economy is underpinned in part by public action, much of it funded by taxation. The UK Prime Minister, David Cameron, recently claimed that “every single pound of public money started as private earning.” Continue reading


Redistribution, growth and political stability

An argument often heard on the right of the political spectrum is that taxation is a ‘burden’ on economic activity and should be reduced as far as possible to promote economic growth. It is generally recognised that taxing a particular activity will discourage that activity. Continue reading